Addressing threats to health care's core values, especially those stemming from concentration and abuse of power. Advocating for accountability, integrity, transparency, honesty and ethics in leadership and governance of health care.

Wednesday, April 28, 2010

Oh, the Prices We Pay, Reloaded - Celgene Balks at Explaining High Price of Thalidomide

A brief article on Bloomberg.com implied that Celgene has been fighting efforts by the Canadian Patented Medicine Prices Review Board to get pricing data about the drug Thalidomid (thalidomide):

Celgene Corp., the biotechnology company specializing in blood-cancer medicines, will get a hearing before Canada’s highest court over the country’s demands to provide pricing information for the drug Thalomid.

The Supreme Court of Canada today agreed to hear Celgene’s appeal of a Federal Court of Appeal ruling that said Canada’s Patented Medicine Prices Review Board was entitled to information about the pricing of the drug. The high court gave no reason for its decision.

Celgene’s two top-selling drugs are Revlimid and Thalomid, for a form of blood-cancer called multiple myeloma. They brought in more than 80 percent of the company’s total $2.25 billion in 2008 revenue.

It should be no surprise that Celgene may be sensitive about the price of Thalidomid. We posted back in 2005 about the stratospheric prices of new drugs that seemed disproportionate to manufacturing and development costs on one hand, and the value of the drugs for patients on the other. We noted that thalidomide, a very old drug that notoriously was found to cause birth defects when it was given to pregnant women, but that then showed promise as an anti-cancer drug, was being marketed in the US for $29 per capsule (approximately $25,000 a year), while a generic form sold in Brazil for $0.07 per capsule.

The amount Celgene manages to make from this very old (and demonstrably cheap to produce) molecule is vivid, albeit anecdotal evidence about what has gone wrong with health care prices in the US. Despite health care insurance companies' protestations that their goal is to provide reasonably priced health care, they seem utterly incapable of negotiating down the prices of even the most obviously over-priced drugs. And the US government Medicare program so far is prohibited by law from negotiating prices. How our supposed free market health care system has tilted so far in favor of pharmaceuticals is a reason to wonder, but ought to be reason to investigate.

Meanwhile, Celgene's 2010 annual report shows that the company has sold more than $400 million worth of Thalidomid yearly since 2007. The company's total sales in 2009 were $2.567 billion, while it spent $795 million on research and development, and $754 million on general, sales, and administrative expenses. According to the company's 2009 proxy statement, in 2008 its CEO received over $8.5 million, its COO over $5.1 million, its CFO over $2.1 million in compensation, and a senior vice president over $3.0 million. The total compensation of its five highest-paid hired managers (compare to a total of 2813 full-time employees in 2009), approximately $20.5 million 2008, was was approximately 2.6% of the company's net income in 2009, and just under 1% of its total sales.

As we have said previously, so the health care bubble continues to inflate. One cause is"compensation madness," including "insiders hijacking established institutions for their personal benefit." Another is the amazing acquiescence of those who pay bills at all levels, from the individuals who ultimately fund health care through salary dollars not earned, health insurance premiums, co-pays and the like, and tax payments, through the health care insurers and government agencies who did not balk at paying $25,000 a year for thalidomide in 2005. If we really want to provide accessible health care of good quality and a reasonable cost, we will need to develop mechanisms to pay more reasonable amounts for health care goods and services. This will require some courage facing down the corporate and organizational insiders who have made themselves very rich from the current craziness.

1 comment:

Anonymous
said...

I am a female Lupus patient, who experienced premature menopause at the age of 34 years. From 1994 through 1997, I received the generic capsule of Thalidomide via one of the AIDs connected foundations in a container of 100 capsules for under $300 (after my primary physician contacted and wrote a letter to the foundation distributing the Thalidomide). Since the FDA granted the Thalidomide patent to the Celgene Corporation in the year of 1998 (and I lost my private health-care insurance coverage, when my policy was downgraded, causing the annual premium to rise to $29,500 in the year of 2003, which hence forced me to become a beneificiary of NJ Medicaid), I now receive 28 capsules of Thalidomide per month from the Celgene Corporation in New Jersey for close to $3,800. Since I have been forced to become a beneficiary of Medicaid, the taxpayer is paying for this drug I must ingest, which has numerous side effects. The efficacy of this drug is questionable, to say the least, compounding the cost to the taxpayer via ER visits to the university hospital for severe GI pain. Hence, Celgene in reality is not a viable corporate entity, especially since at least 44% of its annual revenue is derived from this ridiculous, evidently dubious, patent for Thalidomide. Take away this patent from Celgene, and it is obvious that this corporate entity would not be able to stay afloat. The Celgene Corporate entity should have been stillborn at birth. Basically, the taxpayer is artificially propping up this nonviable corporate entity. It's no wonder that the founder and head CEO of Celgene ("Sol") brought in the likes of Arthur Hulles Hayes Jr. to help obtain such a patent via the FDA. Reading how Celgene ultimately acquired this patent by intially stealing it from the EntreMed corporate entity reads better than fiction and should be a lesson to future miscreants. "Sol" has assigned himself a very handsome annual salary exceeding $16 million besides his yearly multi-million-dollar bonuses and stock options (all paid by the American taxpayer). What he actually does to earn such a high annual salary (plus outrageous benefits) is a good question. I would like to know from what universities he holds degrees. I also would like to know how he sleeps at night. He probably repeats to himself, "Everybody does it, so why not me." Yes, we can blame these CEOs, their corporate entities, board of directors, but the real blame falls on the American people. It's no wonder the roads are in such horrendous condition, and our bridges are literally collapsing. Just think how many young or middle-aged people would be able to complete medical degrees and advanced degrees in genetics and bio-chemistry each year with the tax dollars now currently being used to pay off the Celgene corporate entity, its CEO, and COO. Why do we need private nonviable corporate entities like Celgene, when the taxpayer could easily send a few hundred or so students through advanced degree programs to create better therapies than some 60-plus year old drug with so many side effects like severe nerve damage? "Sol" needs to return some of that money to the taxpayer or begin paying for promising students' tuition to make amends. I continue to argue the above to no avail with my primary physician, who is an associate professor and director of the rheumatology section at one of the leading university medical schools on the east coast. He does smile, when I finish my argument with "Well, someone is going to acquire a new private jet this year." When I shop for my imported BRT dog at one of the specialty shops in Central New Jersey, I always enjoy watching the shiny, brand new jets flying low overhead as they prepare to land at the nearby private airport. Central NJ is part of the so-called "Golden Belt," which includes the bankers and pharmaceutical corporate CEOs.

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